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Permian Oil Boom Threatens To Overtax Electrical Grid

The shale boom in the Permian where companies are intensively drilling while keeping costs low has led to an unprecedented electricity demand in West Texas, straining the grid as local utilities try to keep up with demand.

In the 2.0 shale boom in the Permian, companies are replacing the expensive diesel-powered and natural gas-powered generators for powering compressors with a cheaper option— hooking up to the grid, the Houston Chronicle reports.

This shift among oil companies to use more electricity from the grid is catapulting electricity demand to unprecedented highs, straining the grid and threatening its reliability because of potential overload.

Three utilities—Oncor, Texas-New Mexico Power, and AEP Texas—serve most of the areas close to the Permian. Power demand in and around the hottest U.S. shale play is expected to rise to 1,000 megawatts by 2022, up from just 22 megawatts in 2010, according to Houston Chronicle.

“To say that this is load growth like we have not experienced before is kind of an understatement,” Jeff Billo, senior manager of transmission planning at the Electric Reliability Council of Texas (ERCOT), which oversees 90 percent of the state’s grid, told the Houston Chronicle.

“There is not an area in ERCOT that has seen that kind of load growth before. That is unheard of,” Billo added.

Related: Does Conoco Know Something That Its Competition Doesn’t?

The utilities are seeking fast-tracked approvals of projects to build new transmission lines and are upgrading existing lines and substations.

Oncor requests from regulators to fast-track two projects worth an estimated US$223.6 million. Oncor will invest most of its annual US$1.7-billion budget on transmission upgrades on West Texas, as it expects electricity demand in the Permian to triple over the next five years, spokesman Geoff Bailey told the Houston Chronicle.

Texas-New Mexico Power, with some 20,000 customers in West Texas, has started to upgrade lines and substations as its demand jumped to nearly 250 MW in 2017 from 96 MW in 2014, spokesman Eric Paul told the Houston Chronicle.

By Tsvetana Paraskova for Oilprice.com

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  • onlymho on April 08 2018 said:
    makes little sense to expand capacity this much for a temporary demand cycle - just deny applications and allow producers to generate their own power as they had been previously - how hard is that ???
  • Dick Booth on April 06 2018 said:
    Seems like a lot of work and money to invest especially with so much uncertainty over oil prices and renewable sources. I understand that we have to keep going at the moment but I think some serious analysis of long term probability should be done.

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